Elusive Intangibles: They Are All Around Us
Posted: 6/30/2009 1:49:23 PM by
Carrie Urban Kapraun | with 0 comments
In my last post, I detailed the ten intangibles that are evaluated when valuing a sponsorship opportunity. The whole concept of intangibles was very new to me when I began my career in sponsorship at IEG. During my previous life as a media planner/buyer, intangibles were something that at best I thought about on a surface level, and at worst I basically ignored or discounted.
I remember a time early in my media career when the media agency I worked for was asked to evaluate and place a value on a naming rights sponsorship for a major insurance company. At the time, naming rights were not as commonplace as they are now. We evaluated and quantified things such as impressions from passing vehicles, the value of expected press mentions and impressions from event attendees. Never once did we venture into placing a value on the sponsor’s activation opportunities or the sponsor’s protection from ambush. Honestly, none of us would have even known what those were anyway. We used the advertising metrics that we were familiar with to value the opportunity.
Media planners and buyers are whizzes when it comes to evaluating media and media vehicles using criteria such as CPMs, CPPs, circulation, audience delivery, ratings, share, indices, etc. (note that these are all quantitative criteria). I’ve seen some planning spreadsheets that would make your head spin. When a media planner/buyer explains to a client that a certain media vehicle was chosen based on its low CPM and broad audience delivery, it is easily understood by the client and relatively easy for the planner/buyer to defend.
When I used to develop media plans for clients, I remember there being an enormous amount of information to consider. There are numerous media from which to choose and a crazy number of vehicles within each medium. To top it off, the number is always growing. Some of the decisions were of course guided by the client’s budget, peak sales period, target audience, available creative, etc. Others were left for us to decide.
What I didn’t realize at the time is that we often dealt with and made decisions based on intangibles surrounding media. They were lurking under the surface all along.
For example, you could have two television programs that are almost equal in terms of CPM or CPP, ratings and share, but one program would be included in a media buy and one wouldn’t. The question is why. Let’s say that the one program is Cops and the other program is a family-friendly sitcom. For a family-friendly product, the sitcom would be chosen not because it presents anything quantitatively superior, but on the qualitative measure of appropriateness it is far superior for this particular client. To add to that, let’s say the sales rep for the sitcom always provides bonus :10 opening and closing billboards and delivers timely post-buy reports. Also, the sales rep watches out for your client’s ads and makes sure that there is separation between your client’s ads and their competitors. These are all extremely valid and important considerations. These points are regularly used when making media-buying decisions, yet they are normally not defined or quantified or sometimes even verbalized or discussed.
Leaving the marketing world, we can see how intangibles are a factor in other decisions on value. Take residential real estate. I would consider the square footage of a home, the number of bedrooms and bathrooms, the size of the lot, the taxes and age of the home to be tangible benefits. These are things that can be quantified and compared fairly easily. But beyond those, the intangibles for real estate are really what are important to people, what influences the price of the home and ultimately what influences people to buy. I would consider the home’s location to be a huge intangible. Why are there such price discrepancies among similar homes in neighboring locations? It can be related to the school system, access to transportation, public services offered, crime rates, etc. These are generally considered but not always quantified when making a decision to buy a home.
In summary, intangibles are an important part of any decision-making process and are often not given the credit, thought and time they deserve. I think it is beneficial for everyone to develop metrics and criteria to quantify and compare intangible benefits, especially in a sponsorship context, because I would challenge you to think of any situations where intangibles wouldn’t apply or aren’t an important factor.
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Filed under: valuation, media sponsorship